|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Between Memorial Day and Labor Day, a trip to the beach or national park used to be as American as apple pie, baseball and summertime action movies. But this year, with economic concerns weighing heavily on the minds of nearly all Americans, this annual ritual is in definite jeopardy.
In fact, a recent survey by research firm StrategyOne found that an amazingly high 56 percent of Americans say they plan to forego a summer vacation this year. Less than a third—28 percent— intend to take a trip, while 16 percent have yet to decide whether to hit the road.
Since the company did not do a similar survey last year, StrategyOne has no comparison numbers, says Bradley Honan, New York City-based senior vice president at StrategyOne.
Nevertheless, given the long-standing American tradition of summertime family sojourns, Honan was surprised by the low percentage of those actually planning to take a trip.
“The assumption in our culture is that just about everybody takes a summer vacation,” he says. “To find so few people doing it was remarkable.”
StrategyOne surveyed more than 1,000 Americans in late June. Overwhelmingly, those who plan to travel will stay in the U.S., with 76 percent saying a domestic trip is on the agenda. And while staying within the confines of the U.S., 88 percent say they will travel more than 100 miles from home.
An international jaunt is envisioned by 13 percent, while a lucky 12 percent see both domestic and overseas travel on the horizon.
Other reports support the contention that more and more Americans would really rather stay at home this summer. In the most recent travelhorizons, a quarterly survey co-authored by Ypartnership and the U.S. Travel Association, 45 percent of those polled in April indicated they planned to take a summer holiday this year, down from 53 percent the previous year. What’s more, travelers are cutting down on the number of nights away from home during their longest trips, from an average of seven in the summer of ’09 to 6.7 this year.
It’s not hard to figure out why Americans are hesitant to travel this summer. Household budgets are being squeezed by the sputtering economy, and discretionary items such as leisure trips are either being shortened or cut altogether, says well-known travel guru Peter Yesawich, chairman and CEO of Orlando, Florida-based Ypartnership, a travel services marketing firm.
Like Honan, Yesawich was somewhat surprised by the results. In recent months, the economy seemed to be turning a corner, with unemployment and housing prices stabilizing. Yet those green shoots were apparently not enough to overcome financial uncertainty and the high cost of travel in the minds of most Americans.
Consequently, Americans intend to spend fewer dollars on travel, either by trading down to less expensive lodgings or staying less nights, Yesawich notes. By a slight increase, more Americans are opting to drive instead of fly to their destination and travel to vacation spots closer to home.
But there was some encouraging news from the Ypartnership survey. Those who do plan on taking off this summer say they will increase the number of trips, up to 2.1 from 1.9 last year. “That is a general reflection of the fact that there are some people who are more optimistic out there than there were a year ago,” Yesawich explains.
And all-inclusive resorts that allow vacationers to pay one price upfront are seeing a boost in popularity. “Those properties have actually fared quite well in this difficult time because consumers want to know the cost of a trip before they go,” Yesawich says.
But while Americans dither about whether to take a vacation or not, many hotels are trying to lure in guests with low prices—a controversial practice, to say the least.
According to Katie Deines Fourcin, director of public relations for Expedia.com in Bellevue, Washington, the number of hotels participating in Expedia.com’s summer sale this year from last has increased from around 5,000 to more than 7,400.
“If there [ever] was a time to travel and take advantage of good pricing, now is the time to do it,” she says.
She also reports that hotels participating in the Expedia.com summer sale have already seen a 16 percent increase in room night growth this year versus last.
Furthermore, some destinations have seen an increase in bookings on Expedia sites, which includes Expedia.com and Hotels.com. Bookings to Maui are up 12 percent year over year, as are San Diego (up 10 percent) and Las Vegas (up 5 percent). Outside the U.S., bookings to Paris have increased 15 percent, while Rome has seen a 12 percent rise.
“ADRs across the board really did come down during the economic recession and that sort of helps consumers to budget their vacations better,” Fourcin says. “We saw some interesting patterns in terms of consumers using lower ADRs to trade up. Maybe they had $150 [budgeted] and they would have typically booked a three-star property, but now they are able to book a four-star property.”
Consumers, Yesawich agrees, have certainly become much more adept at using online booking sites like Expedia to comparison shop and find great deals. That, in turn, could nudge the fence-sitters to hop in the car or on a plane.
“Demand for leisure travel services is somewhat elastic,” Yesawich says, “which means when the prices go down, you can generally stimulate a little more demand. It’s certainly true in the lodging business, and absolutely true in the airlines business. The more [consumers] discover those very attractive offers, yes, that can be a catalyst for converting people to take a trip they otherwise hadn’t planned or perhaps taking the type of vacation that they thought was otherwise unaffordable.”
Yet consumers are also focused on value, Honan says. Simply putting out a low price may not be enough to lure in customers.
True, consumers are anxious about what’s in their wallets, but they also want to get as much bang for their buck as they can. In the StrategyOne survey, more than half—52 percent—stated they planned to spend more on their summer vacation this year than last. So bargain rates are not the only determining factor in driving people to take to the road. The experience and service offered by a resort has to be unique and special enough to justify spending those extra coins.
“The tourism industry is going to have to confront how they present their value proposition to their customers and potential customers,” Honan says. “People are casting a much more critical eye on how they spend their money. Does the resort offer value for the money? Does it offer an exceptional value in terms of the experience that it offers? Does a particular property give you something that you arguably couldn’t get somewhere else? Those are the kinds of questions people are going to be thinking about as they consider their vacation plans.
“We have a less than a third that are taking vacations, but there is another 16 percent that is on the fence,” he continues. “They haven’t decided whether they are going to take a vacation this year or not. Some of that is certainly going to be driven by the economy, but frankly a lot of that is going to be driven by the marketing and the public relations work that the resorts and the industry does to position itself as focused on having the ability to deliver real value.”
Moreover, Honan says that it remains to be seen whether slashing rates will have the intended effect of bringing in guests. “If a property is just slashing prices or a particular resort looks like it’s an unusually good bargain, I think people are going to be a little bit skeptical,” he says. “People are of two minds on this question, and it’s not clear which side they are going to come down on.”
As Yesawich sees it, hotels are trading lower or flat rates for a slight increase in occupancy. But merely offering bargain-basement ADRs is no guarantee of a profitable summer.
Therefore, when Labor Day rolls around, Yesawich expects the 2010 summer vacation season to be a wash out. “I’d say the summer, for the most part, is going to be what I call a zero-sum game for the business,” he says. “By that I mean, one property’s loss will be another’s gain and that is there is no real net growth in demand. We haven’t seen any kind of significant growth in demand that would lead us to think hotels can start raising rates to the extent they had hoped over the past year-and-a-half.”
|
 |
|
